February 15, 2019

Economics for Inclusive Prosperity (EfIP)

We launched today a new initiative for academic economists that we hope will make the discipline of Economics more relevant to today’s pressing policy problems. The initiative consists of a network called Economics for Inclusive Prosperity (EfIP) with an initial set of 10 policy briefs. The briefs open with an introductory statement of our philosophy and go on to specific policy recommendations for finance, trade, labor markets, social policy, technology policy, and political institutions. The network is co-directed by Suresh Naidu, Gabriel Zucman, and me, and has 11 additional founding members. We hope to expand the group and we will add more policy briefs in the months ahead.

As we state in our introduction, we believe

mainstream economics – the kind of economics that is practiced in the leading academic centers of the country – is indispensable for generating useful policy ideas. Much of this work is already being done. In our daily grind as professional economists, we see a lot of policy ideas being discussed in seminar rooms, policy forums, and social media. There is considerable ferment in economics that is often not visible to outsiders. At the same time, the sociology of the profession – career incentives, norms, socialization patterns – often mitigates against adequate engagement with the world of policy, especially on the part of younger academic economists.

The problem is compounded by the lousy reputation Economics has acquired among proponents of an inclusive economy. Too often the discipline is viewed as the source of the policies that have produced the excesses and fragilities of our time. Mainstream economics and neoliberalism are viewed as one and the same.

We beg to differ:

Many of the dominant policy ideas of the last few decades are supported neither by sound economics nor by good evidence. Neoliberalism – or market fundamentalism, market fetishism, etc. — is a perversion of mainstream economics, rather than an application thereof. And contemporary economics research is rife with new ideas for creating a more inclusive society. But it is up to us economists to convince their audience about the merits of these claims.

As important as specific policy prescriptions in different domains of economics are, we also have a bigger claim: our essays produce overarching themes that taken together provide a coherent overall vision for economic policy that stands as a genuine alternative to market fundamentalism. This is a vision that rejects the reliance on competitive equilibrium as a realistic benchmark, understands that the world is always second-best, highlights the role of power imbalances in shaping existing institutional arrangements, and emphasizes the need for imagination in devising alternatives that are both more inclusive and more conducive to prosperity. We strive for a whole that is greater than the sum of the parts.

We do not intend to duplicate the excellent work being done in policy think tanks in Washington, D.C. and elsewhere. Many economists engage with these think tanks and their ideas get airing through them. Our initiative is different in that it is a network of academic economists. We are committed to policy proposals based on sound scholarship. But we also care about what these policy ideas imply in turn for the way in which we should practice Economics in the class room and in the seminar room. And we are less influenced by immediate political constraints or opportunities of the policy scene in Washington, D.C.

We believe Economics can be an ally of inclusive prosperity. That is why we have embarked on this project. The initial set of policy briefs on the EfIP website is our first step. We hope they will stimulate and accelerate academic economists’ sustained engagement with creative ideas for inclusive prosperity and that we will be able to follow up soon with an even richer set of policy discussions.